Vietnam's central bank will cap bank loans to customers who use the money to invest in shares at a maximum 5 percent of the bank's registered capital, it said in a directive.

The new rule, which had been widely expected by the market, replaces a previous regulation which allowed banks to lend up to 20 percent of their registered capital for investment in securities, including bonds and shares, based on State Bank of Vietnam's regulations.

It is effective from Feb. 1, 2015.

Only banks with a bad debt ratio of less than 3 percent of loans are qualified to lend for stock investment, said the directive seen by Reuters.

The new ruling, coupled with a central bank's debt classification circular in effect from early 2015, could reduce inflows into Vietnam's equities market, experts said.

"Some banks will face trouble in lending for stocks investors, especially when the circular comes into effect early next year," said deputy general director Trinh Hoai Giang of Ho Chi Minh City Securities.

Vietnam has been battling with high levels of non-performing loans that have stifled efforts to boost private sector businesses and stimulate credit growth.

Vietnamese banks expected bad debts to fall sharply by year-end to 2.5 to 2.7 percent of total loans, lower than the central bank's estimate of 3.7 to 4.2 percent, Prime Minister Nguyen Tan Dung said on Wednesday.

The VN Index was up 0.3 percent at 595.10 points at 0329 GMT. It has gained nearly 18 percent so far this year.